TOTAL REWARDS

Total Rewards

Total Rewards

Introduction

The total reward approach is a broad concept; it represents the complete worth of financial rewards to individuals. A total reward package encompasses every single investment that an organization makes in its people. Total rewards are the tools that are available to the employer. These tools help the employer to retain, attract and motivate employees.

Five Advantages of the Total Reward Approach

The five major advantages of total reward system are

Increase in Flexibility: Companies have started to recognize the need to allow employees to associate their lives with their work. Human resource in America is workaholic. Every employee gets a two weeks' vacation, but most of them do not use them all because numerous companies utilize the holidays and vacations to keep and attract the employees. It is observed that the vacations and holidays are completely up to companies in US.

Improvement in Retention and Recruitment: Total reward system improves the process of recruitment. It also increases the retention rate of the employees. The employees would not want to leave an organization where they are treated in a better way and are rewarded and appreciated for their good work continuously (Akpan, 2002).

Reduction in Cost of Turnover and Labor: This strategy assists the organization to reduce the employee turnover rate. Since, the employees are satisfied by working in the organization; therefore, they would not want to leave the organization. It also helps to reduce the costs of replacement and training and allows the organization to maintain the skills and experience of employees for a longer period of time.

Increased Visibility in the Labor Market: The total rewards approach helps the organization to have an increased reputation as an employee-friendly company. This increased reputation helps the organization to attract highly experienced and qualified candidates.

Increased Profitability: The total rewards strategy increases the productivity of the organization. As the employees are more committed to work and are more productive. Hence, the profitability of the organization increases automatically.

Five Common Ways a Total Rewards Strategy Can Go Astray

Trying to re-engineer programs in pieces: The organization must re-engineer and review the program, when adopting the total rewards approach. The company must not re-engineer the short- variable pay programs and must not carry forward the basic salary programs next year (Ehigie and Akpan, 2001).

Trying to implement changes all at once: The organization must not implement all the changes at the same time. This has a negative impact on the productivity of the employees and the organization is impacted. It is better that, the organization implements programs from time to time, so that employees can adjust to the guidelines that they have to follow.

Limiting the number of people involved: The organization must not involve a greater number of people in the system of total rewards. The stakeholder of the organization must be fully aware of the total rewards system that is to be implemented in the organization.

Not doing a thorough impact analysis: the managers before making a decision and implementing the total rewards system ...